Members could be at risk of paying more for their health insurance, or losing it completely, once the American Rescue Plan Act (ARPA) subsidies expire at the end of 2022.
The ARPA responded to the increased need for affordable health coverage during COVID-19 by extending enrollment periods and increase tax credits. These allowed millions of members to find Marketplace coverage, but with the 2022 expiration nearing, an estimated 3 million members may lose coverage.
Members in All Income Levels See Savings Under the ARPA
What makes the ARPA so unique is its impact on a wide net of members.
In addition to improving subsides for low-income individuals, the ARPA extended subsides for those higher up on the income level. The ARPA improves affordability and extended member access to plans by:
- Lowering the premium contribution limit for households between 100-400% of the federal poverty level (FPL).
- Offering no-premium coverage for households from 100-150% FPL.
- Lowering the premium contribution limit to 8.5% and extending tax credits for the first time to households above 400% FPL.
Open Enrollment 2022 owes part of its success to the increased accessibility to zero- and low-premium plans on the Marketplace. The ARPA contributed to a record 14.5 million individuals enrolling in 2022 Marketplace coverage, a 21% increase compared to the previous year.
Individuals with access to zero-premium plans on the Federally Facilitated Marketplace (FFM) increased from 43% in 2021 to 62% in 2022. Additionally, individuals with access to plans that cost less than $50 per month increased to 73% in 2022 compared to 57% in 2021.
But these benefits and enrollment gains are in jeopardy with the ARPA set to expire at the end of 2022.
The End of the ARPA Spells Trouble for Everyone
Of the 19.6 million individuals enrolled in the ACA Marketplace, The Assistant Secretary for Planning and Evaluation (ASPE) estimates 13.4 million will be negatively affected by the ARPA expiration. This is not to say that over 13 million people will lose coverage, but many will and even more will end up paying more for the same coverage.
The transition from zero to low premium plans may result in millions of members losing coverage. Members that transitioned to plans that cost as low as $1 per month will need to establish payment channels. Adding hoops to jump through only limits access to coverage.
Experts project that 15% of those currently enrolled in the Marketplace would lose coverage without the increased tax credits. Most of these individuals that will become uninsured fall between 133% and 400% FPL.
Potential Premium Increases Hurt Older Members in Rural Communities
In addition to individuals who will lose coverage altogether, ASPE expects 8.9 million enrollees to experience a reduction in their subsidies and 1.5 million to lose subsidies entirely.
The return of the subsidy cliff (where those above 400% of the FPL don’t receive any tax credits) will cause many to lose all their tax credits. Often overlooked due to relatively high-income levels, older individuals in rural areas are at significant risk of overpaying for coverage.
Uncertainty Surrounding 2023 Plan Rates Reduce Affordability
In addition to losing premium tax credits, members must worry about the rise of base plan rates. Health plans are struggling to determine plan details and pricing for 2023 due to potential risk-pool changes.
Members between 18 and 34 will experience the most significant loss of coverage following the ARPA expiration. Health plans must adjust as their younger and healthy members leave. Projected risk pools determine plan pricing, so this uncertainty about the 2023 population has many health plans making conservative estimates and raising their rates.
Some states expressed their intention of providing rates under the assumption that the ARPA will expire; others are providing two rates for either outcome.
Neither health plans nor members enjoy the uncertainty surrounding the ARPA. With health plans planning for next year, Congress receives push back on all sides to end this state of limbo.
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Josh Schultz is a Senior Policy Analyst at Softheon, where he advises the company on health policy issues affecting businesses and government health agencies. Prior to Softheon, Josh worked for a non-profit agency assisting Medicare beneficiaries, a technology company, and consulting firms.